Official Fed Decision Thread

[malkusm]

Fed decision 2:15 Eastern...predictions?

Personally I think 25 basis pts. and Dow falls 200-300 pts....most "analysts" predict 50 basis pts. and it will all be rainbows and candy canes.

I'm selling short....standing to lose or gain a lot of money here.

Thoughts?

[rdenner]

You have "cahones" the size of watermellons my friend :)


I stopped playing that game 2 years ago...

Robert

[greendiseaser]

Actualy a lot of "analysts" are saying 25 basis.
Rick Santelli among them.

I tend to agree with you.
This Fed is too stupid to even get basic concepts down.

I don't think inflation is the answer,
but i also don't think it makes any sense to piss off the market.

If you are going to inflate, just go along with the markets and give them what they want when they want it.

If The Fed now decides that .25pts is sufficient, when everyone and their mother in the financial sector is screaming bloody murder for .50 ... they are going to SERIOUSLY derail the markets.

I agree 200-300pts. I could see a dip down to 400.
And i see this as a reaction-swing top anyhow.
We will fall 3 out of 5 days next week if we don't get 50 basis.

I'm flat through this news, btw.
Pivots only and NO news.
:D

[malkusm]

Haha....well I lost about $1000 since November trying to buy the bottoms...I'm convinced no matter what these talking heads say that the bottom is closer to 11000 than 12000. I've got my finger on the "sell" button though...I'm ready.

[malkusm]

I liked the CNBC guy who was still convinced we weren't going into recession...the market is only a REACTION to actual economic conditions and numbers that come out are delayed....but I guess he can keep convincing himself ;)

[greendiseaser]

wow. "smart" fed!
:D

20 points up on Emini!

[GHoeberX]

Just heard it on CNN:

Federal Reserve Cutting rates by 0.50%

That's 1.25% in 1 week!!

[malkusm]

Ahhhh 0.50%

Got out of my position quickly enough though

[Shinerxx]

Gold just broke $930/oz

[greendiseaser]

Gold just broke $930/oz

and the dollar just got SLAMMED on the dollar index.

I STG, we will see it break in to the 60s by the end of 2008.

:(

[ThomasJ]

Man this is going to get bad.

We are going to be hitting 1% interest rates in a few months at this rate.
Then we are going to get another big bubble. Instead of recession we will have full out depression.

I guess they are ok with that because any possible problems in the future do not exist yet. Lets just keep on delaying.


Anyone get the feeling that the US government is taking out a 2 million home equity loan on a 400k house?

[Paul.Bearer.of.Injustice]

inflation is the only way out of a $9 trillion debt without the biggest tax increases in history.

They need to inflate an average of $30K per person, or $42K per person over age 18.

I'd rather see a tax increase than purposeful inflation - which decimates the poor and working class.
Or even better, let Wall St. collapse and screw everyone equally.

[Join The Paul Side]

I hate the Fed. :mad:

[malkusm]

So I admit, I'm only 20 and I don't have the experience that some of you may have when it comes to my understanding of markets. Somebody tell me if I have this right though:

The Fed funds rate is basically the rate at which banks can loan money to other banks. Short-term, all the banks have more money with a lower interest rate because they pay less (3% now) to obtain it. This allows you and I to obtain a loan at a lower rate also, providing a boost to the economy through spending.

Long-term, this injects a lot of money into the system that we don't even have. Bank A borrows from Bank B who borrows from Bank C who borrows from Bank A....then when it's time for the banks to collect, they come to you and I to get that money, else it must be printed to cover these loans. The first option destroys the economy quickly, the second destroys it slowly through inflation and devaluation of the currency.

Is that a pretty accurate description of what's going on?

[greendiseaser]

So I admit, I'm only 20 and I don't have the experience that some of you may have when it comes to my understanding of markets. Somebody tell me if I have this right though:

The Fed funds rate is basically the rate at which banks can loan money to other banks. Short-term, all the banks have more money with a lower interest rate because they pay less (3% now) to obtain it. This allows you and I to obtain a loan at a lower rate also, providing a boost to the economy through spending.

Long-term, this injects a lot of money into the system that we don't even have. Bank A borrows from Bank B who borrows from Bank C who borrows from Bank A....then when it's time for the banks to collect, they come to you and I to get that money, else it must be printed to cover these loans. The first option destroys the economy quickly, the second destroys it slowly through inflation and devaluation of the currency.

Is that a pretty accurate description of what's going on?


I'm not sure the description is technicaly "accurate", but the basic concept is correct.

Try reading a book like The Creature From Jekyll Island ...

because the whole application of how 100% Fiat (ie. NO commodity backing) currency works is pretty mind boggling.

HERE IS SOMETHING TO LOOK AT: You need to understand that ALL money in the system DEBT. ALL OF IT.


Marriner Eccles was the Governor of the Federal Reserve System in 1941. On September 30 of that year, Eccles was asked to give testimony before the House Commmittee on Banking and Currency. The purpose of the hearing was to obtain information regarding hte role of the Federal Reserve in creating conditions that led to the depression of the 1930's. Congressman Wright Patman, who was Chairman of that committee, asked how the Fed got the money to purchase two billion dollars worth of government bonds in 1933. This is the exchange that followed.

ECCLES: We created it.
PATMAN: Out of what?
ECCLES: Out of the right to issue credit money.
PATMAN: And there is nothing behind it, is there, except our government's credit?
ECCLES: That is what our money system is. If there were no debts in our system, there wouldn't be any money.
-The Creature From Jekyll Island, Griffin, Pg. 187

[greendiseaser]

malkusm,

to actualy answer your question. If you want to truly understand this, the Federal Funds rate IS, as you say, the rate at which other banks "lend" to other banks yet.

BUT, you need to understand the ABOVE post concerning ALL money being DEBT.
The money the Federal Funds rate affects is ALL NEW Federal Reserve Notes. This money sits in a big bundled pile (or more likely big binary piles in a computer) in the Federal Reserve vaults. But it is VERY MISLEADING for "them" to insinuate that this is "money" being borrowed. It is not. Any "money" lying in the Feedereal Reserve vaults is, in fact, NOT money. It goes on no books as being an asset or liability to ANY one, UNTIL the very moment it is BORROWED! NO MONEY IS ISSUED UNTIL "SOMEONE" BORROWS IT.

The very first and very last dollar ever created will be issued like this.
The BANKS are the ones that borrow.
So you now see that, this is the reason it is the "rate at which banks lend to other banks".

No bank has any money to lend. Any money they had ... that is, any money they had deposited got LENT RIGHT BACK OUT! at a ratio of 9 to 1, no less. You deposit a dollar, and they lend out 9 new ones.

But even that is a bit of a misrepresentation.
Like i said, it is VERY complex how they rigged this system.

It really works more like this, with the Fed actualy being an intermediary to public lending ... because remember THEY HAVE THE "MONEY" and they ONLY lend. This is not commmodity money, where anyone at any one time OWNS that dollar ... if it was a gold dollar ... you would LITERALY have a commodity little nugget of GOLD that YOU owned and could do whatever you please with.

Our current system has it that NO ONE has any real commodity (well, techinicaly the banks have a HUGE commodity, they have the pledge of all humanity to repay, and they are on the hook to the government for THEIR debts, and guess who pays Uncle Sams debts? Uh huh ... all of humanity) ...

No one has a real commodity, because every dollar is OWED by someone ... it is actualy a DEBT instrument ACCUMULATING INTEREST.

Lets try to start from the beginning.
The US was running on gold backed dollars. Fully redeemable for outright payment in commodity worth. If you don't like gold (if you're one of those, "i personally don't understand why gold has any value" people) just think about commodity money as being worth redemption in whatever commodity you wanted, a playstation or a bushel of wheat ... because the market recognizes the value of gold ... it is something which REQUIRED HUMAN EFFORT TO PRODUCE. Someone had to mine and mint it!

Anyhow ... the economy was more or less functioning well using real wealth as money.

Then the Federal Reserve came along.
Then THEN THEY STARTED THE SCAM (http://www.buildfreedom.com/tl/rape2.shtml)
They just started altering the "wording" of the dollar so that it became a bit hazy. Eventualy they were printing sraight counterfeit currency, worth only what the market assigned it in value.

At this point, with ONLY "worthless
Customers would walk in to a bank and they would either be depositing or withdrawing funds, or they would be borrowing or paying off loans.

Tthe banks were daily receiving REAL wealth ... that is, customers were still depositing GOLD and SILVER coin, and also notes fully redeemable for such. Yet, the customers were being paid out ONLY notes redeemable for other worthless notes.

The banks could then "give" the gold to the Fed (keep in mind the Fed is a private entity OWNED by banks, so what is the circularity of a bank borrowing from itself?) in exchange for about NINE times that in worthless FRNs. As gold totaly disappears from the money scene ... as the market begins to realize that they should hold on to their gold and repay their bank loans in worthless FRNs, then the FRNs themselves become the backing that are "given" to the Fed in exchange for 9 times mor FRNs.

It is in THIS way that money is created.
The banks lend it to themselves to lend to other banks to lend to customers.
And all the banks "borrowed" from a printing press, which by the way will never be looking to collect any interest. Stupid printing presses. They could be so rich.